Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy
between this translated document and the Japanese original, the original shall prevail.

May 24, 2023
To our shareholders:

Non-recorded Items Concerning the Notice ofthe 126th Annual Shareholders Meeting

Basic Policy on Internal Control and Operation Status Thereof
Notes to Consolidated Financial Statements
Notes to Non-Consolidated Financial Statements

SINTOKOGIO, LTD.
In accordance with the provisions of laws and regulations and Article 16 of the Company’s Articles ofIncorporation, the above items are excluded from the paper-based documents delivered to shareholders who havemade a request for delivery of such documents.
Note that, for this general meeting of shareholders, paper-based documents stating items subject to measures forelectronic provision, excluding the above items, will be delivered to all shareholders regardless of whether they
have made a request for delivery of such documents.

- 1 -Basic Policy on Internal Control and Operation Status Thereof
The Company applies the following matters resolved at a Board of Directors meeting as the Basic Policy
Concerning Internal Control Systems as explained below.
Systems and other businesses for ensuring the compliance of execution of duties by Directors with laws, ordinances
and the Articles of Incorporation, systems for ensuring the appropriateness of businesses performed by a corporategroup consisting of the Company and its subsidiaries (hereinafter the “Group”), and the operation status for the said
systems
1. Systems concerning the storage and management of information related to execution of duties by theCompany’s Directors and the operation status for the said systems(1) Materials related to the agendas for the Company’s Board of Directors meetings and items submitted thereto,and the minutes of the said meetings shall be prepared on the basis of legal provisions, and stored and managedin accordance with the term of storage.
(2) Important documents related to business execution shall be stored and managed in accordance with the termof storage, in addition to written applications for approval that serve as information concerning the executionof the Company’s businesses, materials attached thereto, the minutes of the meetings of meeting bodies andcommittees, etc. participated in by the Company’s Chief Executive Officer, written contracts evidencing theCompany’s rights and obligations, accounting documents, and account books, etc.
(3) Storage, management and access to information stated above shall be prescribed in Document Management
Regulations. The approval of the Board of Directors and understanding of the Board of Auditors shall beobtained when revising the Document Management Regulations.
(Operation status)
Directors, Auditors and the Audit Group read the minutes of Board of Directors meetings and the records ofwritten approval applications, etc., or obtained their copies in the fiscal year under review as needed in order tofulfill their responsibilities.
2. Regulations and other systems concerning the management of the risk of loss involving the Company, and theoperation status for the said systems(1) Regarding major risks involved in the Company’s business administration, systems needed for the
management of individual risks shall be prepared by clarifying responsible divisions and Officers in charge
by risk category.
(2) Risks shall be grasped and analyzed, and countermeasures shall be planned, implemented, assessed, andfollowed up by visualizing whole major risks concerning the Company not limited to individually managed
risks in a risk map and prioritizing those risks through the establishment of the Risk Management Committee
aimed at managing them comprehensively.
(3) The Risk Management Regulations that serve as the basis for risk management and related individual
regulations shall be established.
(4) Action guidelines and manuals shall be prepared by risk category, and training and education shall be provided
to facilitate their understanding.
(5) Business continuity plans (BCPs) shall be formulated to prepare for disasters, etc., and training shall be
provided for preventing and reducing disaster damages. In addition, risk distribution measures, including thestorage of components and consumables, shall be taken as needed.

- 2 -(Operation status) The Risk Management Committee had three (3) annual meetings. The Committee decided on Directors in chargeof and divisions responsible for respective major risks surrounding the Company, in addition to reviewing avisualized risk map. Directors in charge decided on a basic approach and specific methods for dealing with therisks based on their discussions.
 The status of activities by the Risk Management Committee was reported to the Board of Directors.
 BCPs for restoring production, etc. are formulated at the Headquarters and respective bases to prepare fordisasters, etc. Periodic training (on initial responses and restoration responses) is provided every year to continue
the improvement of BCPs.
3. Systems for ensuring effective execution of duties by the Company’s Directors and the operation status for thesaid systems(1) Systems for managing business plans(i) The Medium-Term Business Plan and business plans for respective fiscal years shall be formulated withclarified basic management policies, such as the management philosophy and the mission as their basis.
Management targets including those for business results and business strategies decided in those plans
shall be incorporated into plans and targets for respective divisions and managers in business executionlines for the sake of their achievement. Businesses shall be operated through the chain of those targets.
(ii) Whether or not results for management targets are advancing as planned shall be verified at the
Executive Meeting every month. In addition, required measures shall be discussed and decided by the
Board of Directors based on quarterly, semiannual and annual business reports.
(2) Systems for managing business execution(i) Criteria for important business execution matters that should be submitted to and decided by the Boardof Directors shall be clarified in accordance with the Board of Directors Regulations.
(ii) The Board of Directors shall be made to specialize in decision-making and supervisory functions byexpanding the Executive Officer System. At the same time, business execution shall be made more
efficient and speeded up, and where responsibility for the execution lies shall be clarified by transferring
authority over the execution of regular businesses to Executive Officers.
(iii) Authority over and responsibility for daily business execution shall be appropriately transferred toreporting lines in order, and responsible persons at respective levels shall make decisions timely andappropriately under the authority and responsibility of Executive Officers in accordance with the
Administrative Authority Regulations and the Division of Duties Regulations.
(Operation status)
The President decides on the Medium-Term Business Plan, business plans for respective fiscal years, andrequired measures based on discussions with respective divisions. The President receives reports on progress,
and reports progress to the Board of Directors.
Managing Executive Officers, Executive Officers, etc. execute duties assigned to each of them in accordancewith relevant regulations.
4. Systems for ensuring the compliance of execution of duties by the Company’s Directors and employees withlaws, ordinances and the Articles of Incorporation, and the operation status for the said systems(1) SINTO Corporate Ethics Action Guidelines which prescribe actions and a frame of mind the Company’s
Officers and employees need for observing laws, ordinances and the Articles of Incorporation and maintaininga high sense of ethics, and a manual for specific actions based on the Guidelines shall be formulated, and madeknown to all parties.

- 3 -(2) The Nomination and Remuneration Committee consisting of Independent External Officers only (in which
Independent External Directors are members and Independent External Auditors are attendees) shall beestablished on the basis of the Board of Directors Regulations. The Committee shall deliberate and resolve
matters concerning basic policies on the nomination of and remuneration for Directors and Auditors, etc.,
nomination, evaluation and remuneration, and submit its resolutions to the Board of Directors.
(3) The Sustainability Committee shall be established to plan and promote activities focused on the environment,
health and safety. At the same time, the Ethics/Compliance Committee shall be set up to strengthen initiatives
related to compliance.
(4) The Audit Group shall be established to periodically audit the status of internal control within the Company.
(5) The SINTO Speak-up System shall be prepared to enable the Company’s Officers and employees to make awhistle-blowing report to the Company’s Auditors and its legal division, or external lawyers directly.
(6) Resolute responses shall be in the ordinary times given to antisocial forces and organizations that threatensocial order and safety in close cooperation with external specialist bodies such as lawyers. Unreasonable
demands shall be confronted firmly by means of organized responses.
(7) Education systems by position rank such as new employees, mid-career employees and newly-appointed
managers, etc. and education systems by job category such as sales and management shall be promoted tofacilitate the acquisition of required knowledge and improve a sense of ethics.
(Operation status) The Company asked its Director in charge of business execution to confirm the compliance of execution ofduties in the fiscal year under review with laws, ordinances and the Articles of Incorporation, and received fromthe said Director the written confirmation of the compliance.
 Training by position rank concerning the SINTO Corporate Ethics Action Guidelines was provided.
 The Nomination and Remuneration Committee in which four (4) External Directors who are Independent
Officers are members and two (2) External Auditors are attendees held three (3) annual meetings, deliberated
and passed a resolution on the nomination of Directors and remuneration for them, etc., and submitted its
resolutions to the Board of Directors.
 The Sustainability Committee held two (2) annual meetings, and reported the status of its activities to the Boardof Directors.
 An audit by Auditors, audit by the Accounting Auditor, and internal audit were conducted. Information wasreciprocally and closely exchanged, and proposals for improvement were made as needed.
 Contact points for whistle-blowing are set up at Statutory Auditors, and inside and outside of the Company, andmade internally known to respond to the declaration of facts. The prohibition of disadvantageous treatment isclearly stated when making their establishment internally known.
 The Ethics/Compliance Committee held one (1) annual meeting, and reported the status of its activities to theBoard of Directors.
 The Company has established our sustainability policy and ethics/compliance policy in the “SINTO Business
Partner Guidelines,” and promotes them together with suppliers.
 The Company has reviewed the basic transaction agreements with suppliers and construction subcontractors andexpanded the provisions on legal compliance.
5. Systems for ensuring the appropriateness of businesses at the Group and the operation status for the said
systems(1) Systems concerning reports to the Company of matters related to execution of duties by the Group’s Officers
and employees The Company shall require periodic reports to the Company of important information, such as the businessresults and financial conditions of Group companies, under the Affiliated Company Management

- 4 -

(2)


(3)

(4)

Regulations established by itself. In addition, the Company shall require deliberation and approval by its
Board of Directors regarding important matters that fall under its Board of Directors Regulations.
Regulations and other systems concerning the management of the risk of loss by Group companies
The Company shall establish the Risk Management Regulations that prescribe risk management for theGroup as a whole, determines responsible divisions by risk category under the said Regulations, andcomprehensively manages risks for the entire Group.
Systems for ensuring efficient job execution at Group companies(i) The Company shall formulate the Group Medium-Term Business Plan that covers a period of three (3)fiscal years, set priority management targets for the entire Group for each fiscal year based on
discussions, review progress periodically, and implement countermeasures confirmed reciprocally.
(ii) The Company shall set criteria concerning the division of duties, authority, decision-making and othermatters related to organization in the Group, and instruct Group companies to build systems based on
the criteria.
Systems for ensuring the compliance of job execution at Group companies with laws, ordinances and the
Articles of Incorporation(i) The Company shall establish the SINTO Corporate Ethics Action Guidelines and make the Guidelines
known to all Group Officers and employees.
(ii) The Company shall establish Sinto Beliefs applied to all Group Officers and employees including thoseat overseas Group companies, and make the Corporate Ethics Action Guidelines, safety policies,
environmental policies and quality policies known to all parties.
(iii) The Company shall position appropriate numbers of Auditors at Group companies in Japan according
to their respective sizes.
(iv) The Company shall seek to raise the compliance awareness of Officers and employees at Group
companies in Japan. At the same time, the Company shall aim to make compliance matters known to allparties by organizing periodic meetings participated in by the presidents of Group companies.
(v) The Company’s Audit Group shall periodically conduct internal audits of Group companies based on
the Internal Audit Regulations and the Affiliated Company Management Regulations.
(vi) The Company shall prepare the SINTO Speak-up System enabling Officers and employees at Group
companies in Japan to make a whistle-blowing report to the Company’s Auditors, its legal division, or
external lawyers directly, and prohibit dismissal and other disadvantageous treatment for the reason of
making the reports.
(vii) The Company shall work to prepare relevant regulations in accordance with internal control assessment
criteria concerning generally accepted financial reports in order to ensure the reliability of the Group’s
financial reports. At the same time, the Company shall prepare systems for making appropriate reports,
and build structures for periodically and continuously assessing preparation and operation status for thesystems.

(Operation status) The Company received reports on important information, such as business results for Group companies, inaccordance with relevant regulations, and submitted those reports to its Board of Directors for deliberation andapproval as needed.
 The Company received reports on a map of risks at Group companies in Japan, and worked to grasp risks for theGroup as a whole.
 The Company provided training on compliance and other matters to Directors and Auditors at Group companies
in Japan.
 The Company converted audit items at Group companies in Japan into a checklist, and received reports on audit
results from Auditors at the said companies.

- 5 - The Company received business reports and reports on the state of risks, such as information on complaints andaccidents, from top managers at Group companies in Japan every month. At the same time, the Company
received reports on the results of Board of Directors meetings held every month. The Company held a meeting
participated in by the top managers of Group companies once every quarter, and worked to make compliancematters known to all parties. At the same time, the Company received reports on the progress of business plansfor each fiscal year at respective companies. In addition, Group companies in Japan held their respective Annual
Shareholders Meetings in May, and reported their results to the Company’s top manager.
 The Company received reports on the state of audits by Auditors at respective Group companies in Japan fromtheir top managers. At the same time, the Company received audit results to the effect that no material fact of theviolation of laws, ordinances or the Articles of Incorporation existed.
 The Company is continuing to maintain and step up the management of risks at overseas Group companies
through holding companies in the United States and Europe.
 The Company received business reports and reports on the state of risks, such as information on complaints andaccidents, from top managers at overseas Group companies every month. At the same time, the Company
received reports on the results of Board of Directors meetings held periodically.
 The Company worked to make Group management policies known to overseas Group companies by holding the
SINTO INTERNATIONAL CONFERENCE participated in by its top manager and his counterparts at theoverseas Group companies in July. Through the conference, the Company confirmed the risk management status
at the Group companies. The Company also received reports on the progress of business plans for the fiscal year.
Furthermore, the Company held a report meeting for overseas Group companies at the end of the year where theprogress of business plans, etc. were reported to its top manager. Overseas Group companies also held theirrespective Annual Shareholders Meetings, and reported their results to the Company’s top manager.
 The Company received from the top managers of overseas Group companies a written pledge to the effect thatthey submit required reports to the Company and obtain required approval from the Company based on
regulations established by the Company.
 The Company converted legal compliance items at overseas Group companies into a checklist, and received
reports on results at the said companies.
 The Company’s Auditors, Accounting Auditor and Audit Group conducted audits of Group companies in Japanand overseas Group companies in concert with one another.
 The Company is responding to the declaration of facts by setting up contact points for whistle-blowing at
Statutory Auditors, and inside and outside of the Company, and by making them known to Group companies inJapan. The Company is clearly stating the prohibition of disadvantageous treatment when making theirestablishment known to Group companies in Japan, too.
 In addition to the above, the Company appropriately operated the systems in accordance with the systems statedabove.
6. Systems concerning employees who should assist the Company’s Auditors in their duties in cases where the
Auditors requested their assignment, matters concerning the independence of the said employees from theBoard of Directors and the guarantee of the effectiveness of instructions, and the operation status for the said
systems(1) Individuals appropriate as employees to assist the Company’s Auditors in the execution of their duties shallbe posted in cases where the Auditors requested them.
(2) Regarding execution of duties by employees who should assist the Company’s Auditors in the execution of
their duties, a system for keeping the said employees independent from the Company’s Board of Directors
shall be secured.
(Operation status)
The members of the Company’s management division in charge are providing assistance to the Auditors.
- 6 -7. Systems for the Directors and employees of the Company and Group companies to make reports to theCompany’s Auditors and the operation status for the said systems(1) The Company’s important documents, such as the records of its Auditors’ attendance at important internal
meetings, written approval applications, the minutes of important meetings and important reports, shall be
provided to the Auditors. At the same time, systems enabling their reading as needed shall be secured.
(2) The Officers and employees of the Company and Group companies shall promptly and appropriately report
matters concerning business execution when reports on them are requested by the Company’s Auditors.
(3) The Officers and employees of the Company and Group companies shall directly submit reports to theCompany’s Auditors when facts that may cause remarkable damages to the Company or its subsidiaries, suchas the violations of laws and ordinances, etc., are discovered.
(4) The Company’s Audit Group shall periodically submit reports to the Company’s Auditors, and report thestatus of internal audit, etc. at the Company and the Group.
(5) The Company’s division in charge of the whistle-blowing system shall periodically report to the Company’s
Auditors the status of such reports by the Officers and employees of the Company and Group companies.
(Operation status) The Company’s division in charge of the whistle-blowing system reported to Auditors the details ofwhistleblowing by the Officers and employees of the Company and Group companies, and the state of
responses.
 The Company published in its monthly internal newsletter that Officers and employees of the Company and its
Group companies may report directly to the Company’s Auditors.
 In addition to the above, the Company appropriately operated the systems in accordance with the systems statedabove.
8. Systems for ensuring that a person who made reports as described in the preceding article will not be subject toany disadvantageous treatment for making such reports, and the operation status for the said systems(1) The Company shall prohibit the disadvantageous treatment of Officers and employees who made reports to its
Auditors for making such reports, and make this rule known to all Group Officers and employees.
(2) The Company shall prescribe in the SINTO Speak-up System and the detailed regulations for its operation
established based on the Risk Management Regulations that Group Officers and employees may report directly
to the Company’s Auditors. At the same time, the Company shall clearly state the prohibition of dismissal andother disadvantageous treatment due to such reporting itself.
(Operation status) The Company operated the systems, and confirmed the absence of problems based on the systems stated above.
9. Matters concerning procedures for the advance payment or reimbursement of expenses incurred in theexecution of duties by the Company’s Auditors and other policies concerning the treatment of expenses or
liabilities incurred in the execution of such duties, and the operation status for the said systems(1) In the event that an Auditor of the Company requests the Company for advance payment of expenses, etc.
under Article 388 of the Companies Act in connection with the execution of his/her duties, the Company shall,
after deliberation by the department in charge, promptly dispose of such expenses or liabilities, unless such
expenses or liabilities are deemed not necessary for the execution of such Auditor’s duties.
(2) The Company shall allocate a certain amount every year to pay for expenses incurred in the execution of duties
by its Auditors, etc.

- 7 -(Operation status)
There was no budget shortfall in conducting audits in accordance with the audit plan for the fiscal year underreview.
10. Other systems for ensuring effective audits by the Company’s Auditors and the operation status for the said
systems(1) Opportunities for on-demand or periodic interviews, or opinion exchanges with the Company’s Auditors,
Chief Executive Officer and Accounting Auditor shall be secured.
(2) The effectiveness of information gathering shall be guaranteed by securing opportunities for the Company’s
Auditors to directly interview individuals in charge of business promotion, such as the chiefs of businessoffices under the scope of audit, and general managers and section chiefs at those offices.
(Operation status) The Accounting Auditor submitted a periodic report on the results of audits for the fiscal year to Auditors basedon laws and ordinances. Auditors also interviewed the Accounting Auditor concerning the state of audits asneeded.

- 8 -[Notes to Consolidated Financial Statements]
Basis of Preparation of Consolidated Financial Statements
1. Scope of consolidation(1) Status of consolidated subsidiaries
Number of consolidated subsidiaries:

48

Names of major consolidated subsidiaries
MEIKIKOU Corporation, SINTO S-PRECISION, LTD., Heinrich Wagner Sinto MaschinenfabrikGmbH, Roberts Sinto Corporation, Qingdao Sinto Machinery Co., Ltd., Sinto Brasil Produtos Limitada,
3DCeram-Sinto, Inc. and Omega Sinto Foundry Machinery Limited
3DCeram Sinto Tiwari GmbH was included in the scope of consolidation due to newly acquired shares.
Daito Kihan Co., Ltd. was excluded from the scope of consolidation at the beginning of the current fiscal
year, as it was dissolved in an absorption merger with our company as the surviving company.
WES Omega Malaysia was excluded from the scope of consolidation due to its closure in January 2022.
(2) Status of unconsolidated subsidiaries
Number of unconsolidated subsidiaries:

6

Names of major unconsolidated subsidiaries
PT. Sinto Indonesia
Reason for exclusion from the scope of consolidation
The six unconsolidated subsidiaries are excluded from the scope of consolidation, because they are allsmall in scale, and any total amount in terms of their total assets, net sales and profit or loss (amountcorresponding to the Company’s ownership interest) as well as retained earnings (amount corresponding
to the Company’s ownership interest) and others do not significantly affect the consolidated financial
statements.

2. Application of equity method(1) Status of unconsolidated subsidiaries accounted for using equity method:
Number of unconsolidated subsidiaries accounted for using equity method:

5

Names of major companies, etc.
PT. Sinto Indonesia
Sinto Engineering India Pvt. Ltd. was excluded from the scope of non-consolidated subsidiaries
accounted for using equity method due to the completion of closure procedures in March 2023.
Number of associates accounted for using equity method:

6

Names of major companies, etc.
Laempe Mossner Sinto GmbH
(2) Status of unconsolidated subsidiaries not accounted for using equity method
Number of unconsolidated subsidiaries not accounted for using equity method

1

Names of major companies, etc.
Cathay Asia Pacific Co., Ltd.
Wuhan 3DCERAM Technology Co., Ltd was excluded from the scope of affiliates not accounted for by
the equity method due to transfer of shares in January 2022.

- 9 -Reason for not accounted for using equity method
One unconsolidated subsidiary is excluded from the scope of application of the equity method, because it
has little influence on profit or loss (amount corresponding to the Company’s ownership interest), retained
earnings (amount corresponding to the Company’s ownership interest) and others, and has no
significance.
3. Fiscal year of consolidated subsidiaries
The balance sheet date of thirty-one (31) overseas consolidated subsidiaries was December 31, 2022. The datediffers from the consolidated balance sheet date. However, consolidated accounting is performed on the basisof financial statements for the fiscal year of the said consolidated subsidiaries because the difference between
the said date and the consolidated balance sheet date is less than three (3) months. However, adjustments
required for consolidation are made for significant transactions that arose in the period from the said date to theconsolidated balance sheet date.

4. Accounting policies(1) Valuation basis and methods for significant assets(i)Securities
Available-for-sale securities
Securities other than those with no market price, etc.
Stated at fair value (valuation differences are booked directly in a separate component of net assets,
and cost of securities sold is mainly determined by the moving average method).
Securities with no market price, etc.
Stated at cost determined by the moving average method.

(ii)

Inventories
Stated at cost (balance sheet value is determined by the method of writing down the carrying amountbased on profitability decline).
Finished goods and work in process
Stated at cost determined by the specific identification method for goods produced on order, andstated at cost determined by the moving average method for abrasives, etc.
Raw materials and supplies
Stated at cost determined by the progressive average inventory method for raw materials and supplies
concerning the manufacture of goods produced on order, etc., and stated at cost mainly determinedby the moving average method for raw materials concerning the manufacture of abrasives, etc.

(2) Accounting methods for depreciation of significant depreciable assets(i)

Property, plant and equipment (excluding leased assets)
Depreciated mainly using the declining balance method. However, domestic companies use thestraight-line method for buildings (excluding facilities attached to buildings) that were acquired on orafter April 1, 1998, and facilities attached to buildings and structures that were acquired on or after
April 1, 2016.

- 10 -

Major useful lives are as follows:
Buildings and structures
Machinery, equipment and vehicles
Other
(ii)

7 to 50 years
4 to 12 years
2 to 15 years

Intangible assets (excluding leased assets)
The straight-line method is used.

(iii)

Leased assets
The straight-line method is applied assuming the lease period as the useful life without residual value.

(3) Accounting policy for significant provisions(i)

Allowance for doubtful accounts
To prepare for credit losses on receivables such as accounts receivable - trade and loans, an estimateduncollectable amount is provided at the amount estimated by either using the historical rate of credit
loss for general receivables, or based on individual consideration of collectability for receivables suchas highly doubtful receivables and distressed receivables.

(ii)

Provision for bonuses
To prepare for payment of bonuses for employees, the estimated amount of bonuses to be paid during
the fiscal year under review is provided.

(iii)

Provision for bonuses for directors (and other officers)
To prepare for payment of bonuses for directors (and other officers), the estimated amount of bonuses
to be paid during the fiscal year under review is provided.

(iv)

Provision for product warranties
To prepare for complaint processing expenses that may accrue during a fixed period after the delivery
and acceptance inspection of plants and large machines supplied on order, etc., the amount of the said
expenses estimated to accrue for net sales for the fiscal year under review is recorded on the basis of
the ratio of the said expenses to net sales in the past.

(v)

Provision for loss on orders received
To prepare for a future loss on order contracts, an estimated amount of loss on order contracts at theend of the fiscal year under review is provided.

(vi)

Provision for retirement benefits for directors (and other officers)
To prepare for the payment of retirement benefits to Officers, an amount required for their payment at
the end of the fiscal year under review is provided at some of the consolidated subsidiaries based oninternal rules for the provision of retirement benefits for Officers.

(4) Accounting policy for significant revenue and expenses
The Group manufactures and sells facilities and equipment (including those for remodeling and installationand maintenance) for surface treatment, foundry, environmental, material handling and special machinery
businesses, etc., and components and consumables related to the said facilities and equipment. Major
obligations in these businesses are product delivery and service provision in the case of facilities andequipment, etc. under contracts with customers, and product delivery in the case of components andconsumables.

- 11 -

Revenue from facilities, equipment, components and consumables is recognized, assuming the point where
products under contracts with customers are delivered and the point where services under the said contracts
are provided as the point where control is transferred.
Revenue from large plants and special machines among facilities and equipment is recognized over a fixed
period by estimating the rate of progress as an obligation fulfilled over the fixed period because the highdegree of manufacturing to customer specifications makes their diversion to other contracts difficult.
Revenue is recognized at the point where installation, etc. is completed as an obligation fulfilled at a given
point in cases where installation, etc. is not an obligation fulfilled over a fixed period.
(5) Accounting methods for retirement benefits(i)Method of attributing expected retirement benefits to periods
In the calculation of retirement benefit obligations, expected retirement benefits are attributed to theperiod up to the end of the fiscal year on a benefit formula basis.

(ii)

Method of expensing actuarial gains and losses
Actuarial gains and losses are expensed using an amount obtained by proportionally dividing such gains
and losses by a fixed number of years (ten (10) years) within the average remaining service period of
employees at the point of their accrual in the straight-line method from the fiscal year after the year of
their accrual.

(iii)

Adoption of the simplified method at small enterprises, etc.
Some of the consolidated subsidiaries use the simplified method for the calculation of retirement benefit
liabilities and retirement benefit expenses.

(6) Accounting policy for translation of significant foreign currency assets or liabilities into Japanese yen
Monetary receivables and payables in foreign currencies are translated into Japanese yen at the spot
exchange rate prevailing as of the consolidated balance sheet date, and translation differences are accounted
for as profit or loss. Assets, liabilities, revenue and expenses for overseas consolidated subsidiaries, etc. aretranslated into Japanese yen at the spot exchange rates prevailing as of the balance sheet dates of respective
subsidiaries. Translation differences are recorded by including them in foreign currency translation
adjustment and non-controlling interests under net assets.
(7) Method of significant hedge accounting
Deferred hedge accounting, a basic accounting method, is used. Appropriation is adopted for monetary
receivables and payables in foreign currencies with forward exchange contracts fulfilling hedge accounting
requirements, etc.
(8) Accounting method and period for amortization of goodwill
Goodwill is amortized in two (2) to ten (10) years in the straight-line method.
5. Items related to changes in accounting methods
Application of the Implementation Guidance on Accounting Standard for Fair Value Measurement
The Company has applied the “Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No. 31, June 17, 2021) from the beginning of the current fiscal year, and inaccordance with the transitional treatment stipulated in Paragraph 27-2 of the Implementation Guidance on
Accounting Standard for Fair Value Measurement, the new accounting policy stipulated by the- 12 -

Implementation Guidance on Accounting Standard for Fair Value Measurement will be applied going
forward. This has no impact on the consolidated financial statements.
Application of ASU No. 2016-02, “Leases”
ASU No. 2016-02, “Leases” (February 25, 2016; hereinafter referred to as “ASU No. 2016-02”) was
adopted in the current fiscal year by foreign subsidiaries that have adopted U.S. GAAP.
Upon adoption of ASU No. 2016-02, lessees generally recognize assets and liabilities for all leases. In
applying this accounting standard, the cumulative effect of adopting the standard, which is permitted as atransitional measure, is recognized at the date of adoption.
As a result, right-of-use assets increased by ¥323 million in property, plant and equipment, and leaseliabilities increased by ¥101 million in current liabilities and ¥221 million in non-current liabilities at the
beginning of the current fiscal year. The effect of this change on the consolidated financial statements for thecurrent fiscal year is immaterial.

6. Items related to revenue recognition(1) Breakdown of revenue
Fiscal year under review (April 1, 2022 to March 31, 2023)
Breakdown of revenue information categorized by individual goods and services(Millions of yen)
Surface
Treatment
Business
11,437
9,293
25,280-Foundry
Business

Reportable Segments
EnvironMaterial
ment
Handling
Business
Business
6,869
6,011
3,393
100
190
-

SpecialEquipment
Business
7,112
409
310
-

Other
(Note 1)

Total

Total

Machines
21,63153,06353,063
Parts
11,98925,18525,185
Consumables
2,180
27,962
27,962
Other
170
170
Revenue from contracts
46,01135,801
10,453
6,111
7,832
106,210170
106,381with customers
Other revenue
Net sales to external
46,01135,801
10,453
6,111
7,832
106,210170
106,381
customers
Note: 1. The “Other” category is a business segment not included in the reportable segments and includes machine design andthe health and welfare business, etc.

Breakdown of revenue information presented by the period in which the revenue was recognized(Millions of yen)Goods transferred at apoint in time
Goods transferred over aset period
Revenue from contracts
with customers
Other revenue
Net sales to externalcustomers

Reportable Segments
EnvironMaterial
ment
Handling
Business
Business

Foundry
Business

42,725

17,116

7,918

6,035

4,489

78,286

170

78,457

3,286

18,684

2,534

76

3,343

27,924-27,92446,01135,801

10,453

6,111

7,832

106,210170

106,381

-

-

-

-

-

-

-

-

46,01135,801

10,453

6,111

7,832

106,210170

106,381- 13 -

SpecialEquipment
Business

Other(Note 1)

Surface
Treatment
Business

Total

Total

Note: 1. The “Other” category is a business segment not included in the reportable segments and includes machine design andthe health and welfare business, etc.

(2) Basic information to understand revenue
The Group is engaged in the manufacturing and sales of equipment and devices as well as the manufacturing
and sales of parts and consumables related to equipment and devices. For sales of equipment and devices,
regarding the provision of products and services in each business that do not require installation and on-site
adjustments, because performance obligations are fulfilled with the delivery of products and the provision ofservices, revenue is recognized at the point at which the performance obligation in question is fulfilled.
Regarding the provision of products and services that require installation and on-site adjustments, thedelivery of products and the installation and on-site adjustment of the products in question are recognized asa single performance obligation, and revenue is recognized at the point at which the installation of the
products and on-site adjustments are completed.
For contract work of equipment and devices, regarding performance obligations that are fulfilled over a set
period, the progress ratio of the fulfillment of performance obligations is estimated, and revenue isrecognized over a set period based on the level of progress completion. In cases where performanceobligations are not fulfilled over a set period, revenue is recognized at the point that installation is complete
as performance obligations fulfilled at a point in time.
For transaction considerations, the Group mainly requests advances from customers for the period fromwhen the order is received until the performance obligations are fulfilled, or payment following thefulfillment of performance obligations. As payments following the fulfilment of performance obligations
mostly come within one year of the point that performance obligations are fulfilled, they do not include
important financial elements.
Regarding parts and consumables related to equipment and devices, revenue is recognized at the point that
performance obligations are fulfilled based on the contract between the Group and the customer.

(3) Information to understand the amount of revenue in the fiscal year under review and the next fiscal year
onwardContract liabilities included advances, etc. received prior to the fulfillment of performance obligations at thetime of order, etc. based on the contract with the customer. Contract liabilities are drawn down with therecognition of revenue.
Of the amount of revenue recognized in the fiscal year under review, the amount included in the contract
liability balance at the start of the year was ¥6,212 million.
Changes in contract liabilities result from increases in revenue from advances received and from revenue
recognition.
The total amount of the value of transactions allocated to the residual performance obligations at the end of
the fiscal year under review was ¥38,742 million. For these residual performance obligations, the Group
expects to recognize revenue over a period of one to three years with the fulfillment of the performanceobligations.

7. Matters concerning accounting estimates
Revenue recognized over a set period
For contract work of equipment and devices, regarding performance obligations that are fulfilled over a set
period, the progress ratio of the fulfillment of performance obligations is estimated, and revenue is recognizedover a set period based on the level of progress completion.
- 14 -

In the fiscal year under review, net sales recognized as revenue over a set period were ¥27,924 million.
Net sales related to performance obligations fulfilled over a set period are calculated based on the total amountof revenue and the progress ratio. The progress ratio is calculated based on the ratio of the actual manufacturingcosts accrued through the end of the fiscal year under review against the estimated manufacturing costs.
Estimated manufacturing costs take into consideration factors, such as project specifications, the state of costs
accrued in similar projects in the past, and the degree of difficulty involved in the projects. Changes fromestimated manufacturing costs may arise due to facts that became known after the start of design, etc. The
difference may significantly affect net sales in consolidated financial statements in the next fiscal year in cases
where manufacturing costs that actually accrued differ from estimated manufacturing costs.

Allowance for doubtful accounts
To prepare for credit losses on receivables such as accounts receivable - trade and loans, an estimateduncollectable amount is provided at the amount estimated by either using the historical rate of credit loss forgeneral receivables, or based on individual consideration of collectability for receivables such as highly
doubtful receivables and distressed receivables. Allowance for doubtful accounts as of the end of the fiscal year
under review was ¥568 million for current assets and ¥40 million for investments and other assets.
In the event of changes in the business performance and financial position of the creditor due to uncertain
future economic conditions or other factors, the amount of the allowance for doubtful accounts may be revised,
which may affect the profit and loss in the following consolidated fiscal year.

Provision for loss on orders received
To prepare for future losses associated with contracts received, projected losses associated with contracts
received at the end of the fiscal year under review are recorded as order loss reserves. The balance of order loss
reserves at the end of the fiscal year under review was ¥431 million.
Of the projects for which the estimated manufacturing costs exceed the monetary value of orders, order loss
reserves are calculated based on the amount of losses expected to be accrued from the next fiscal year onward.
Estimated manufacturing costs take into consideration factors, such as project specifications, the state of costs
accrued in similar projects in the past, and the degree of difficulty involved in the projects. Changes fromestimated manufacturing costs may arise due to facts that became known after the start of design, etc. The
difference may significantly affect net sales in consolidated financial statements in the next fiscal year in cases
where manufacturing costs that actually accrued differ from estimated manufacturing costs.

8. Additional information(BIP Trust for Remuneration for Officers)
The Company engages in transactions with Directors (excluding External Directors) by which the Company’s
shares are issued to the Directors through a trust.
(1) Overview of transactions
The Company introduced the BIP Trust for Remuneration for Officers, a stock compensation plan linked tocorporate value that covers three (3) fiscal years until the fiscal year that ended March 31, 2018 as a highly
transparent and objective remuneration system for Officers, based on a resolution at the 118th Annual
Shareholders Meeting held on June 24, 2015 with the raising of Officers’ eagerness to contribute tocorporate value enhancement in the medium term as an objective. The issuance of shares, etc. did not takeplace in three (3) fiscal years until March 31, 2018 and additional three (3) fiscal years until March 31, 2021

- 15 -

because targets were not achieved. The continuation of the plan was resolved at Board of Directors meetings
held on May 22, 2018 and May 24, 2021.
The plan after its continuation for the second time is a program under which the Company’s shares, etc. areissued as remuneration for Officers according to corporate value enhancement in a fixed period after the endof three (3) fiscal years from the fiscal year ended March 31, 2022 to the fiscal year ending March 31, 2024
(hereinafter the “period covered”) (*) with the period covered as the scope of issuance. The Company’s
shares, etc. to be issued are determined according to positions, and the degree of capital efficiency
improvement and the level of performance target achievement, etc. during the period covered. The issuanceof the Company’s shares, etc. is performed as remuneration for Officers during a fixed period after the endof the period covered only in cases where capital efficiency reached a fixed degree of improvement, etc.
during the said period.
The Trust Period, which had been set from December 3, 2015 to September 30, 2021, was also extended to
September 30, 2024.
(*)

The subsequent three (3) fiscal years will become the period covered in cases where the Trust Period
is extended by changing the trust contract and making additions to the Trust upon the expiration of
the Trust Period after the continuation of the plan.

(2) The Company’s shares left in the Trust
The Company’s shares left in the Trust are recorded as treasury shares under net assets using the carrying
amount in the Trust (excluding the amount of ancillary expenses). The carrying amount and the number ofthe said treasury shares in the fiscal year under review are ¥179 million and 165,200 shares, respectively.

Consolidated balance sheet
1. Pledged assets and secured liabilities(1) Collateralized assets
Buildings and structures
Land
Total

¥255 million¥1,039 million¥1,295 million(2) Corresponding liabilities
Short-term borrowings¥1,017 million

2. Accumulated depreciation of property, plant and equipment
3. Discounts on notes receivable
4. Discounts on export bills¥46,594 million¥1 million¥156 million

Consolidated Statement of Income
Refund of social contributions for past fiscal years
With respect to the PIS/COFINS (Social Integration Program/Contribution for the Financing of Social Security),
which was disputed by a consolidated subsidiary in Brazil over the calculation method, the consolidated
subsidiary’s claim was accepted and the overpaid social security contributions and the amount equivalent to interest
were recorded as non-operating income.

- 16 -

Consolidated Statement of Changes in Equity
1. Class and total number of issued shares as of the end of the fiscal year under review
Common shares

54,580,928 shares

2. Class and number of treasury shares as of the end of the fiscal year under review
Common sharesNote:2,225,773 shares

The number of treasury shares as of the last day of the fiscal year under review includes 165,200 shares of the Company heldby the Trust.

3. Dividends(1) Dividends paid
Resolution
Board of Directors
meeting held on
May 23, 2022
Board of Directors
meeting held on
November 8, 2022
Total

Class of shares

Total dividends(Millions of yen)

Dividends per share(Yen)

Record date

Effective dateCommon shares

693

13

March 31, 2022

June 6, 2022

Common shares

735

14

September 30, 2022

December 9, 2022

1,429

(2) Dividends whose effective date falls in the fiscal year following the fiscal year of the record date
Matters concerning dividends on common shares are decided as follows as subjects for discussion at a Boardof Directors meeting to be held on May 22, 2023.
(i)
(ii)
(iii)
(iv)

Total dividends
Dividends per share
Record date
Effective date

¥1,155 million¥22
March 31, 2023
June 6, 2023

Retaining earnings are planned for use as a dividend source. Total dividends include trust dividends of ¥3
million.

- 17 -Tax effect accounting
Major components of deferred tax assets and liabilities
Deferred tax assets
Inventories
Accrued expenses
Provision for bonuses
Retirement benefit liability
Investment securities
Property, plant and equipment
Tax loss carryforwards
Other
Subtotal
Valuation allowance
Total deferred tax assets¥171 million¥190 million¥558 million¥487 million¥841 million¥402 million¥643 million¥1,207 million¥4,501 million¥(2,906) million¥1,594 million

Deferred tax liabilities
Reserve for tax purpose reduction entry of non-current assets
Undistributed profit of foreign subsidiaries and associates
Valuation difference on available-for-sale securities
Other
Total deferred tax liabilities
Net deferred tax assets¥(95) million¥(1,627) million¥(3,166) million¥(1,337) million¥(6,227) million¥(4,632) million- 18 -

Financial Instruments
1. Status of financial instruments
The Group limits fund management to short-term deposits and investment products with low principal risks,etc. The Group raises funds by means of bank borrowings.
The Group is working to lower customers’ credit risks concerning notes and accounts receivable - trade basedon credit management criteria. The Group manages due dates and balances customer by customer.
Furthermore, the division in charge of accounting and finance is executing and managing forward exchange
contract transactions for foreign currency trade receivables based on requests by the division in charge ofoverseas sales in order to avoid foreign exchange fluctuation risks.
Investment securities are primarily shares related to businesses. The fair values of listed shares with market
price fluctuation risks are grasped quarterly.
In principle, notes and accounts payable - trade are due within one (1) year. The division in charge ofaccounting and finance is executing and managing forward exchange contract transactions for foreign currency
trade receivables based on requests by the division in charge of overseas procurement in order to avoid foreignexchange fluctuation risks.
Short-term borrowings are mainly used as operating funds. Long-term borrowings are primarily used as capital
investment funds.

2. Fair values of financial instruments
Carrying amounts in the consolidated balance sheet as of March 31, 2023, fair values and the differences
between them were as follows. Furthermore, as non-listed shares (¥6,386 million in the consolidated balance
sheet), unlisted convertible bonds (¥150 million in the consolidated balance sheet) and investments ininvestment limited partnerships (¥16 million in the consolidated balance sheet) have no market price, they are
not included in investment securities. Furthermore, because cash and deposits, notes and accounts payable –trade, short-term borrowings, and unpaid corporate taxes are cleared in a short period and their fair value isnearly the same as their book value, notes have been abbreviated.
(Millions of yen)
Carrying amount (*1)
30,050(449)
29,601
10,99821,027[13,060][542]

Fair value (*1)

Difference(1)

Notes and accounts receivable - trade
Allowance for doubtful accounts (*2)

(2)
(3)
(4)
(5)

Securities
Investment securities
Long-term borrowings
Lease liabilities(*1)

The figures in brackets indicate those posted in liabilities.

(*2)

Allowance for doubtful accounts, separately recorded under notes and accounts receivable - trade, isdeducted.

29,601
10,99821,027[12,924]
[542]

–
–
–
(135)
0

Note: Explanation of valuation techniques and inputs used to calculate fair value
The fair value of financial products is categorized into the below three levels based on the observable
inputs used in calculating the fair value and importance.
Level 1 fair value: fair value calculated from the (unadjusted) market value in a market in which thesame assets or liabilities are actively traded
Level 2 fair value: fair value calculated using directly or indirectly observable inputs aside from theLevel 1 inputs- 19 -

Level 3 fair value: fair value calculated where important inputs cannot be observed
Where multiple inputs with important impacts are used in calculating fair value, of the inputs
categorized into each level, fair values are categorized be the lowest level in the order of priorities incalculating fair value.
(1) Notes and accounts receivable - trade
The carrying amount of notes and accounts receivable - trade is used as the fair value of such notes andaccounts settled in short periods because their fair value is assumed to equal their carrying amount.
(2) Securities
The fair value of securities is determined based on the price provided by financial institutions, andclassified into Level 1 or Level 2 fair value.
(3) Investment securities
The fair value of investment securities is primarily determined on the basis of their prices at exchanges andprices provided by financial institutions, etc., and classified into Level 1 or Level 2 fair value.
(4) Long-term borrowings
Their fair value is determined by discounting total principal and interest by an interest rate assumed in thecase of similar new borrowing or new issuance, and classified into Level 2 fair value. The amount of longterm borrowings includes their current portion (whose amount stated in the consolidated balance sheet is¥229 million), which is included in short-term borrowings stated under current liabilities in the
consolidated balance sheet.
(5) Lease liabilities
The fair value of lease liabilities is determined by discounting total principal and interest by an interest rate
assumed in the case of similar lease contract conclusion, and classified into Level 2 fair value. The amountstated above is the sum of lease liabilities stated under current liabilities in the consolidated balance sheet
and lease liabilities stated under non-current liabilities in the said balance sheet.

- 20 -

Per share information
Net assets per share¥2,020.43

Basic earnings per share¥117.93

Note: In calculating net assets per share and basic earnings per share, the Company’s shares held by the BIP Trust for
Remuneration for Officers are included in treasury shares deducted in the calculation of the number of common shares atthe end of the period and the average number of shares during the period.

Significant subsequent events
Not applicable.

- 21 -

[Notes to Non-consolidated Financial Statements]
Significant Accounting Policies
1. Valuation basis and methods for assets(1) Valuation basis and methods for securities

Shares of subsidiaries and associates
Stated at cost determined by the moving average method.
Available-for-sale securities
Securities other than those with no market price, etc.
Stated at fair value (valuation differences are booked directly in a separate component of net
assets, and cost of securities sold is determined by the moving average method).
Securities with no market price, etc.
Stated at cost determined by the moving average method.
(2) Valuation basis and methods for inventories

Stated at cost (balance sheet value is determined by the method of writing down the carrying amountbased on profitability decline).
Finished goods and work in process
Stated at cost determined by the specific identification method for goods produced on order, andstated at cost determined by the moving average method for abrasives, etc.
Raw materials and supplies
Stated at cost determined by the progressive average inventory method for raw materials andsupplies concerning the manufacture of goods produced on order, etc. and stated at cost determinedby the moving average method for raw materials concerning the manufacture of abrasives, etc.
2. Accounting method for depreciation of non-current assets(1) Property, plant and equipment (excluding leased assets)

The declining balance method is used. However, the straight-line method is used for buildings(excluding facilities attached to buildings) that were acquired on or after April 1, 1998, and facilities
attached to buildings and structures that were acquired on or after April 1, 2016.
Major useful lives are as follows:
Buildings
15 to 50 years
Structures
7 to 40 years
Machinery and equipment
5 to 12 years
Vehicles4 to 7 years
Tools, furniture and fixtures
2 to 15 years(2) Intangible assets (excluding leased assets)
The straight-line method is used.

(3) Leased assets
The straight-line method is applied assuming the lease period as the useful life without residual value.

- 22 -

3. Accounting policy for provisions(1) Allowance for doubtful accounts
To prepare for credit losses on receivables such as accounts receivable - trade and loans, an estimateduncollectable amount is provided at the amount estimated by either using the historical rate of credit loss forgeneral receivables, or based on individual consideration of collectability for receivables such as highly
doubtful receivables and distressed receivables.
(2) Provision for bonuses
To prepare for payment of bonuses for employees, the estimated amount of bonuses to be paid during the
fiscal year under review is provided.
(3) Provision for bonuses for directors (and other officers)
To prepare for payment of bonuses for directors (and other officers), the estimated amount of bonuses to be
paid during the fiscal year under review is provided.
(4) Provision for product warranties
To prepare for complaint processing expenses that may accrue during a fixed period after the delivery andacceptance inspection of plants and large machines supplied on order, etc., the amount of the said expenses
estimated to accrue for net sales for the fiscal year under review is recorded on the basis of the ratio of thesaid expenses to net sales in the past.
(5) Provision for loss on orders received
To prepare for a future loss on order contracts, an estimated amount of loss on order contracts at the end of
the fiscal year under review is provided.
(6) Provision for loss on guarantees
To provide for losses related to guarantees of obligations to affiliated companies, an estimated amount oflosses is recorded, taking into consideration the financial conditions, etc. of the companies involved.
(7) Provision for retirement benefits
To prepare for payment of retirement benefits for employees, projected retirement benefit obligations andplan assets at the end of the fiscal year are recorded based on deemed either accrued or realized amount at
the end of the fiscal year under review.
Actuarial gains and losses are expensed using an amount obtained by proportionally dividing the said gains
and losses by a fixed number of years (ten (10) years) within the average remaining service period of
employees at the point of their accrual in the straight-line method from the fiscal year after the year of theiraccrual. However, actuarial gains and losses are recorded under investments and other assets as prepaid plan
expenses in cases where plan assets that should be recognized in the fiscal year under review exceed theamount of retirement benefit obligations after the deduction of the said gains and losses, etc.

4. Accounting policy for revenue and expenses
The Company is engaged in the manufacturing and sales of equipment and devices (including renovations,installation, and maintenance, etc.) in its surface treatment business, foundry business, environmental business,and special machinery business, as well as in the manufacturing and sales of parts and consumables related tothese equipment and devices. Major obligations in these businesses are product delivery and service provisionin the case of facilities and equipment, etc. under contracts with customers, and product delivery in the case ofcomponents and consumables.
Regarding equipment and devices, etc., parts, and consumables that do not require installation and on-site
adjustments, revenue is recognized as transfer of control at the point at which the products contracted with thecustomer are delivered and services are provided. Furthermore, for the provision of products and services- 23 -

requiring installation and on-site adjustments, the product delivery, installation, and adjustments are recognized
as a single performance obligation and revenue is recognized at the point at which final performanceobligations for the on-site adjustments are completed.
For equipment and devices, the fabrication requirements based on customer specifications for large-scale plants
and special machinery are extremely high and transferring them for use in other contracts is difficult.
Therefore, the Company estimates the level of progress for performance obligations fulfilled over a set period
and recognizes revenue over that set period. Where accrued costs for which the level of progress could not bereasonably estimated are expected to be recovered, the upper limit of revenue will be within the scope of theaccrued costs. In cases where performance obligations are not fulfilled over a set period, revenue is recognizedat the point that installation is complete as performance obligations fulfilled at a point in time.
For transaction considerations, the Group mainly requests advances from customers for the period from when
the order is received until the performance obligations are fulfilled, or payment following the fulfillment of
performance obligations. As payments following the fulfilment of performance obligations mostly come within
one year of the point that performance obligations are fulfilled, they do not include important financial
elements.
5. Other significant matters forming the basis of preparation of non-consolidated financial statements(1) Accounting policy for translation of foreign currency assets and liabilities into Japanese yen
Monetary receivables and payables in foreign currencies are translated into Japanese yen at the spot
exchange rate prevailing as of the end of the fiscal year, and exchange differences are accounted for as profit
or loss.
(2) Method of hedge accounting
Deferred hedge accounting, a basic accounting method, is used. Appropriation is adopted for monetary
receivables and payables in foreign currencies with forward exchange contracts fulfilling hedge accounting
requirements, etc.

6. Items related to revenue recognition
Because the same contents are provided in the notes to consolidated financial statements “6. Items related torevenue recognition,” they have been abbreviated here.
7. Matters concerning accounting estimates
Revenue recognized over a set period
For contract work of equipment and devices, regarding performance obligations that are fulfilled over a set
period, the progress ratio of the fulfillment of performance obligations is estimated, and revenue is recognizedover a set period based on the level of progress completion.
In the fiscal year under review, net sales recognized as revenue over a set period totaled ¥15,061 million.
Net sales related to performance obligations that are fulfilled over a set period are calculated based on the total
amount of revenue and progress ratio, and the progress ratio is calculated based on the ratio of the real
manufacturing costs accrued through the end of the fiscal year under review against the estimatedmanufacturing costs.
Estimated manufacturing costs take into consideration factors, such as project specifications, the state of costs
accrued in similar projects in the past, and the degree of difficulty involved in the projects. Changes fromestimated manufacturing cost may arise due to facts that became known after the start of design, etc. The
difference may significantly affect net sales in financial statements in cases where manufacturing cost that
actually accrued differs from estimated manufacturing cost.
- 24 -

Allowance for doubtful accounts
To prepare for credit losses on receivables such as accounts receivable - trade and loans, an estimateduncollectable amount is provided at the amount estimated by either using the historical rate of credit loss forgeneral receivables, or based on individual consideration of collectability for receivables such as highly
doubtful receivables and distressed receivables. Allowance for doubtful accounts as of the end of the fiscal year
under review was ¥337 million for current assets and ¥156 million for investments and other assets.
In the event of changes in the business performance and financial position of the creditor due to uncertain
future changes in economic conditions or other factors, the amount of the allowance for doubtful accounts may
be revised, which could affect the profit and loss for the following fiscal year.

Provision for loss on orders received
To prepare for future losses associated with contracts received, projected losses associated with contracts
received at the end of the fiscal year under review are recorded as order loss reserves. The balance of order loss
reserves at the end of the fiscal year under review was ¥46 million.
Of the projects for which the estimated manufacturing costs exceed the monetary value of orders, order loss
reserves are calculated based on the amount of losses expected to be accrued from the next fiscal year onward.
Estimated manufacturing costs take into consideration factors, such as project specifications, the state of costs
accrued in similar projects in the past, and the degree of difficulty involved in the projects. Changes fromestimated manufacturing costs may arise due to facts that became known after the start of design, etc. The
difference may significantly affect net sales in consolidated financial statements in the next fiscal year in cases
where manufacturing costs that actually accrued differ from estimated manufacturing costs.

- 25 -

Non-consolidated Balance Sheet
1. Accumulated depreciation of property, plant and equipment¥27,513 million

2. Contingent liabilities
Guarantees, etc. are provided for other companies’ debts to financial institutions, etc.
¥32 million
MEIKIKOU Corporation¥77 million
SINTO S-PRECISION, LTD.
¥1,645 million
Heinrich Wagner Sinto Maschinenfabrik GmbH
Sinto America, Inc.
¥400 million¥28 million
Qingdao Sinto Machinery Co., Ltd.
FROHN GmbH
¥199 million
Sinto Bharat Manufacturing Private Limited¥26 million
Total¥2,409 million

3. Monetary receivables from and payables to affiliated companies
Short-term monetary receivables
Long-term monetary receivables
Short-term monetary payables
4. Monetary payables to Directors¥3,584 million¥1,305 million¥1,777 million¥26 million

Non-consolidated Statement of Income
Volume of transactions with affiliated companies
Volume of sales transactions
Net sales
Purchase of goods
Volume of non-sales transactions¥6,355 million¥5,964 million¥789 million

Non-consolidated Statement of Changes in Equity
Class and number of treasury shares as of the end of the fiscal year under review
Common shares
2,225,773 shares
Note: The number of treasury shares at the end of the fiscal year under review includes 165,200 shares of the Company held by
the Trust.

- 26 -Tax effect accounting
Major components of deferred tax assets and liabilities
Deferred tax assets
Accrued expenses
Allowance for doubtful accounts
Provision for bonuses
Provision for loss on guarantees
Investment securities
Shares of subsidiaries and associates
Property, plant and equipment
Other
Subtotal
Valuation allowance
Total deferred tax assets¥135 million¥150 million¥377 million¥309 million¥516 million¥2,212 million¥113 million¥365 million¥4,181 million¥(3,164) million¥1,016 million

Deferred tax liabilities
Reserve for tax purpose reduction entry of non-current assets
Valuation difference on available-for-sale securities
Prepaid pension costs
Total deferred tax liabilities¥(95) million¥(3,076) million¥(448) million¥(3,620) million

Net deferred tax liabilities¥(2,603) million

Transactions with the related party
Subsidiaries and associates(Millions of yen)Type

Subsidiary

Name of thecompany, etc.

Percentage ofvoting rights,
etc. held (heldby others) (%)

Relationship withthe related party

Details oftransaction

Transaction
amountAccount

Endingbalance

Debt guarantee
Debt guarantee
Heinrich Wagner
Concurrent service
Sinto(Owned)of officers
Maschinenfabrik 100% indirectlyGmbH
Borrowing of
Borrowing of funds
funds

1,645

–

–

659

Short-termborrowings

659

Debt guarantee

1,210

–

–

Provision forloss onguarantees carry
over

46

Provision forloss onguarantees

1,011

Subsidiaries FROHN GmbH96%

Debt guarantee

Note: Business terms and policies for their decision, etc.
The debt guarantees to Heinrich Wagner Sinto Maschinenfabrik GmbH are for advance guarantees, etc. received by the company
from banks, and no guarantee fees have been received. Furthermore, the borrowing of funds is decided by considering market
interest rates, etc.
The Company has a guarantee of obligation for the debt of FROHN GmbH for the short-term borrowings of FROHN GmbH
from Shinto Europe GmbH, and does not receive any guarantee fee.

- 27 -

Per share information
Net assets per share¥1,451.84

Basic earnings per share¥97.72

Note: In calculating net assets per share and basic earnings per share, the Company’s shares held by the BIP Trust for
Remuneration for Officers are included in treasury shares deducted in the calculation of the number of common shares atthe end of the period and the average number of shares during the period.

Significant subsequent events
Not applicable.

- 28 -